LONDON, March 28 (Reuters) - Germany’s benchmark 10-year government bond yield fell below 0.50 percent on Wednesday for the first time since early January as investors, increasingly fearful of a U.S.-China trade war, flocked to safe-haven assets.

Chinese state media reported on Wednesday that Beijing plans to announce retaliatory tariffs against U.S. President Donald Trump’s plans for tariffs on up to $60 billion worth of Chinese goods.

Germany’s 10-year Bund yield fell as low as 0.473 percent in early trade before inching back up to 0.498 percent.

The yield on the 30-year Bund dropped 2 basis points to touch its lowest since mid-December 2017, at 1.12 percent, before rising to trade flat by the close.

Analysts said the prospect of retaliatory action by China had dented a brief global equities recovery and kindled safe-haven demand for bonds.

Investors have also rotated out of the tech sector, which had long outperformed the market, knocking world shares down. Wall Street shares suffered a 2-3 percent blow on Tuesday, tech-heavy Asian bourses fell more than 1 percent on Wednesday and European bourses opened sharply lower .

“There’s a general rotation from risky assets towards safe haven assets... with weakened equities and trade war tensions in the general backdrop,” said ING rates strategist Benjamin Schroeder.

“In the euro zone, you also see data coming somewhat on the disappointing side and the ECB striking a more dovish tone.”

Economic sentiment in the 19 countries sharing the euro slipped for the third month in a row in March, while bank lending slowed, data this week showed.

ECB Governing Council members Erkki Liikanen and Jozef Makuch said on Tuesday underlying inflation in the euro zone may remain lower than expected even if growth is robust, so the central bank needed to remain patient in removing stimulus.

Most euro zone bond yields were down by as much as 2 basis points on the day.

Italy’s 10-year bond yield fell to its lowest level in more than three months at 1.84 percent, down 3 basis point on the day. Its gap over better-rated German peers was at 135 bps.

Italy sold 5.5 billion euros in an auction of bonds maturing in 2023 and 2028, fulfilling its target of 4.5-5.5 billion euros. Analysts said the auction showed there was still strong appetite for Italian debt, despite the country’s uncertain political future.

The Italian Treasury sold the February 2028 BTP at a yield of 1.83 percent, the lowest 10-year Italian funding cost since November.

After an inconclusive election in Italy on March 4, the prospects of a coalition agreement between the far-right League and anti-establishment 5-Star Movement have grown.

Elsewhere, British bonds outperformed, with yields dropping by 5-6 basis points. The yield on the 10-year gilt fell to as low as 1.362 percent, its lowest since late January.

A new French bond maturing in 2036 and indexed to eurozone inflation booked was introduced on Wednesday.